Looking To Double Production At Mexican Mine
Sierra Metals Inc. (TSX: SMT) unveiled the results of a positive Preliminary Economic Assessment (PEA) for the company’s Bolivar Mine in Chihuahua State, Mexico.
Highlights of the PEA include:
- After-tax Net Present Value (NPV): US$283 Million at an 8% discount rate
- Incremental benefit of increasing the production to 10,000 TPD from 5,000 TPD is estimated to have an after tax NPV (@8%) of US$57.4 million, and IRR of 27.9%
- Net After-tax Cash Flow: US$521 Million
- Life of Mine & Sustaining Capital Cost: US$317 Million
- Total Operating Unit Cost: US$19.77/tonne and US$1.16/lb copper equivalent
- Plant Processing Rate after expansion: 10,000 tonnes per day (TPD)
- Average LOM Copper Grade 0.72%
- Copper Price Assumption US$3.05/lb
- MineLife: 14 years based on existing Mineral Resource Estimate
- Life of Mine Copper Payable Production: 583 million pounds
CEO Luis Marchese said the positive PEA is an important milestone for Bolivar.
“I am very encouraged by the results of this PEA which support the company’s organic growth strategy and plan to profitably develop and grow the Bolivar Mine production rate to 10,000 TPD in 2024 from today’s capacity of 5,000 TPD, based on current analyst consensus metal price estimates,” Mr Marchese said.
“The company plans to continue with its disciplined approach of profitable growth and now plans to proceed with the next step of the completion of a prefeasibility study to further de-risk the plan and determine the best path forward.
“The PEA study compared the value of the current operations at Bolivar at 5,000 TPD against several output expansion alternatives from 7,000 to 15,000 TPD and determined 10,000 TPD as the optimum production level based on our current mineral resource base.
“We note that the estimated value for Bolivar at 5,000 TPD using current analyst estimates at US$225 million, was roughly in-line with the value estimated in our 2018 PEA ($214 million) which justified our expansion to 5,000TPD two years ago.
“The value could be further increased by the potential sale of magnetite (iron ore) as a by-product and recent exploration drilling which could further increase the resources and value of our asset, as they get incorporated into future operating plans.
“We are continuing with our strategy to increase the value of the company on a per share basis. This builds upon the demonstrated success we have shown with increasing our current mineral resource base and improving the throughput at all mines.
“We expect these positive developments to further improve profitability and cashflow for the company and all shareholders this coming year as well as in the future.”
The property is located in the Piedras Verdes District of Chihuahua State, Mexico, approximately 250km southwest of the city of Chihuahua and consists of 14 mineral concessions (6,800 hectares). The Bolivar deposit is a Cu-Zn skarn and is one of many precious and base metal deposits of the Sierra Madre belt, which trends north-northwest across the states of Chihuahua, Durango, and Sonora in north-western Mexico (Meinert, 2007).